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Challenges in HRM Research in China

Abu Zafar Ahmed Mukul


Assistant Professor and Chairman
Dept. of Management & Finance
Sher-e-Bangla Agricultural University
Dhaka-1207.

Dr. Prof. Shuming Zhao, School of Business, Nanjing University

Zhaosm@nju.edu.cn

Todays Agenda
Ten Hot Topics and four Difficult

Issues
HRM Research Focus in China
Issues and Challenges for the Science
of HRM

Ten Hot Topics on HRM


1. Legal Requirements
China government gradually raised the level for
normalizing the labor market and enforcing the laws (Labor
Law, Contract Law, Employment Promoting Law, etc.).
Facing the competition challenges and managing becomes
more and more multiple and flexible, company human
resource management should meet the government legal
requirements.
Research topics: External environment of HRM, such
as law, labor market, competitors, etc. influencing
HRM.
Zhaosm@nju.edu.cn

2. Self Innovation
Chinese government proposes to establish

Innovated nation, the key is the talent.


How to improve self innovation and creation
motivation through management is a very
important subject to HRM.
Research topics: Innovation, creation,
entrepreneur, entrepreneurship, etc.

Zhaosm@nju.edu.cn

3. Internationalization of Talent
From 1978-2005 China attracted US$600 billion FDI and

invested US$50 dollars abroad. MNCs have established more


than 800 R&D or engineering centers in China. China needs
more internationalized talents
What is the criteria for internationalized talents? Sony hired

Howard Stringer as Chairman of the Board and CEO, Pepsi Cola


hired Indra Nooyi as CEO, PingAn hired Richard David
Jackson as President of the Commercial Bank (Someone has a good

command of a foreign language, understand market economic


rules, has international views, operation capability, and good
performance.)
Research topics: internationalization of talent,
professionalization, marketization, and internationalization of
managers

Dr. Prof. Shuming Zhao, School of Business, Nanjing University

Zhaosm@nju.edu.cn

4. Frequent Changing leadership


Multinational companies, state-owned enterprises,

and private firms are all facing the problem of


frequent changing leadership and high turnover rate.
How to select employees, especially the senior
managers? Is it a good idea for the state-owned firms
to have all managers to retire at the age of 60?
Research topics: Employee Turnover rates, Employee
engagement, employee satisfaction, etc.

Zhaosm@nju.edu.cn

5. Layoffs
Companys layoff brings challenges to the

employee relations.
Research topics: layoff, employee
relationship

Zhaosm@nju.edu.cn

6. Labor Cost and Compensation


Labor cost increased, especially key positions.
How to determine compensation, based on time,

piece of work, technical capability, knowledge,


management, performance?
Research topic: human capital, compensation
system, higher performance organizations,
performance management and appraisal.

Zhaosm@nju.edu.cn

7. High Work Pressure


Entrepreneurs, managers, professional

people, and even workers feel high work


pressures.
How to balance life, work, study, and
family? How to deal with the conflicts
Research topics: improving the quality of
work-life, balancing the conflict of work,
family and life

Dr. Prof. Shuming Zhao, School of Business, Nanjing University

Zhaosm@nju.edu.cn

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8. Labor Relations
Lots of conflicts between employers and employees

and between management and employees


Union Law
Case: Wal-Mart, Apple Computer Inc. , KFC,
McDonalds, and Pizza Hut in China
Research Topics: Labor relations, collective
bargaining, trade unions, and union leaders

Zhaosm@nju.edu.cn

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9. Labor Market and College


Graduates
College graduates feel more difficult to find jobs: 700,000

college students could not find jobs when graduated in


2004; 900,000 in 2005; 1.2 million in 2006; and the
number might reach 1.5 million in 2007. China will
change from degree society to competency society.
Shortage of technical people
Research topics: human resource planning, educating
and training college students, employment for college
graduates

Dr. Prof. Shuming Zhao, School of Business, Nanjing University

Zhaosm@nju.edu.cn

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10. Professional Education and


Training programs
Fast growing professional degree programs: MBA,

EMBA, MPAcc, MPA, Engineering, etc.


Company training, EDPs
Research topics: organization development,
organizational competences, organizational learning,
training and development, career planning and
development

Dr. Prof. Shuming Zhao, School of Business, Nanjing University

Zhaosm@nju.edu.cn

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Four difficult Issues


1. Culture
Under traditional Chinese culture, organizations first
considers equality in compensation system, not
motivation.
China is a society paying much attention to the
issues of face, network, and guanxi.
Some of the Chinese cultural phenomena affect
human resource management in China.
Research Topics: Multinational Business Management,
Managing Foreign Companies in China, Managing Chinese
Companies abroad, Cross-cultural Management, etc.

Dr. Prof. Shuming Zhao, School of Business, Nanjing University

Zhaosm@nju.edu.cn

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Human Resources: the Core of CrossCultural Management

Cultural differences affect the efficiency of


organizations through peoples minds,
values and behavior.

It is also humans (for example, the


managers) who implement cross-cultural
management.

Dr. Prof. Shuming Zhao, School of Business, Nanjing University

Zhaosm@nju.edu.cn

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For Example:

Multinational Staffing Policies


Four Approaches:
Ethnocentric: All key positions are filled by parentcountry nationals.
Polycentric: HCNs are recruited to manage subsidiaries
in their own country and PCNs occupy positions at
corporate headquarters.
Geocentric: utilizing the best people for the key jobs
throughout the organization, regardless of nationality.
Regiocentric: defining as functional rationalization on
a more-than-one country basis, one way is to divide its
operations into geographical regions and transfer staff
within these regions. (regional headquarters)

Dr. Prof. Shuming Zhao, School of Business, Nanjing University

Zhaosm@nju.edu.cn

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Cross-cultural Management
Cross-cultural management is a fascinatingly

complex subject. Cross cultural knowledge


and awareness can assist executives to
improve management skills. More
importantly, it can also help business leaders
make the right strategic decisions.

Dr. Prof. Shuming Zhao, School of Business, Nanjing University

Zhaosm@nju.edu.cn

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2. Concept
Many HRM problems caused by unclear concepts.
Human resource management is the theory, techniques,

methods, and tools for studying the adjustment of people and


their relations in the organization, connection between work
and its relations, matching the people and work in order to fully
develop human resource management, tap peoples potentials,
motivating people, promoting the work efficiencies and
meeting the organizational objectives.
Research topics: human resource management in a
transitional period, functions of human resource
management, human behavior, etc.

Dr. Prof. Shuming Zhao, School of Business, Nanjing University

Zhaosm@nju.edu.cn

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3. System
Companies do not have prefect governance
Many state-owned enterprises have no core

competencies
Private firms are managed by family members and
relatives, it is difficult to practice human resource
management system.
Research topics: human resource management
system innovation in different regions, different
ownership, different industries

Dr. Prof. Shuming Zhao, School of Business, Nanjing University

Zhaosm@nju.edu.cn

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4. Methodology
At present, organizations start to pay attention to

human resource management, but they do not know


how to do it.
We need not only to learn HRM theories, but also
study HRM methods, techniques, and tools.
Many HR managers are learning different kinds of new
methods and tools, such as KPI, 360 degree
feedback, balance score card, etc., But they do not
know what the best and suitable tool is for their firms.
Research topics: HRM theories, methods,
techniques, and tools.

Dr. Prof. Shuming Zhao, School of Business, Nanjing University

Zhaosm@nju.edu.cn

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Todays Agenda
Ten Hot Topics and four Difficult

Issues
HRM Research Focus in China
Issues and Challenges for the Science
of HRM

Dr. Prof. Shuming Zhao, School of Business, Nanjing University

Zhaosm@nju.edu.cn

21

Some of the Modern HRM Theories


from other Areas
Resource based theory from political science
Work cost theory from economics
Human resource strategy theory from corporate

strategy
System theory from sociology
Behavior theory from psychology

Dr. Prof. Shuming Zhao, School of Business, Nanjing University

Zhaosm@nju.edu.cn

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Three Important Focuses in the


Research of HRM in China
Global HRM
Strategic HRM
Evaluation on HRM efficiency and

effectiveness

Dr. Prof. Shuming Zhao, School of Business, Nanjing University

Zhaosm@nju.edu.cn

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I. Global HRM
Globalization has potential implications for virtually all

of the research needs and directions we already have


identified.
Today's increasingly global, competitive marketplace has
driven considerable changes in labor markets, and has
transformed the practice of Human Resource
Management.
Expanded multinational operations within large
companies, combined with increased technology and
communication capability, have led to vast diffusion of
global best practices in HRM.

Dr. Prof. Shuming Zhao, School of Business, Nanjing University

Zhaosm@nju.edu.cn

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Global HRM
As a global company, the only way to succeed is to

develop an effective global human resource management


system with personnel capable of designing and
implementing transnational business strategies.

In most cases firms have historically gone from domestic,

to international, to multinational, and finally to global


operations. At each phase, the approach to human
resource management changes significantly along with
the changes in competitive strategy, company structure,
the product or service being marketed, profit margin, and
expenditure required for research and development.

Dr. Prof. Shuming Zhao, School of Business, Nanjing University

Zhaosm@nju.edu.cn

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Global HRM
Four issues should be researched as firms
go to global operations
Expatriate, Local Managers and their career

Development
Function of Global HRM, such as recruitment, training,
performance evaluation, compensation, Labor relations,
etc.
Cross Cultural Management
Managing diversified workforce

Dr. Prof. Shuming Zhao, School of Business, Nanjing University

Zhaosm@nju.edu.cn

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Phase I: Domestic
Culture

In domestic firms, international cross-cultural


differences are not important.
Human Resources
There are no expatriates. Therefore, crosscultural training and development is not an issue.

Dr. Prof. Shuming Zhao, School of Business, Nanjing University

Zhaosm@nju.edu.cn

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Phase II: International


Culture

Cultural sensitivity becomes very important to


market and clients in each foreign country.

Human Resources

The international firms now include many


expatriates. Good people but not great people
(not future CEOs) are sent abroad.

Dr. Prof. Shuming Zhao, School of Business, Nanjing University

Zhaosm@nju.edu.cn

28

Phase III: Multinational


Culture

In the multinational phase, cultural sensitivity becomes slightly less


important outside the firm. While multiculturalism begins to
become less important outside the firm, it becomes more important
inside of the company. Staff from different parts of the world work
together on a day-to-day basis. By this stage, attention to
developing cross- cultural skills is needed for working both inside
and outside the organization.

Human Resources

The person making decisions for foreign operations is no longer


an expatriate marketing expert, but rather a valued manager of a
worldwide line of business. In this phase, as the approach
changes to multinational, the managers who are sent abroad tend
to be more senior and therefore, more central to the company's
core management.

Dr. Prof. Shuming Zhao, School of Business, Nanjing University

Zhaosm@nju.edu.cn

29

Phase IV: Global


Culture

A global organization needs to understand cross- cultural


differences both inside and outside the organization. Managing
global boards and senior executive committees requires a
sophisticated understanding of cultural differences in interaction
patterns and in attitudes towards time, influence, and problem
solving styles.

Human Resources

In this global Phase, the number of expatriates again increases.


Managers are sent abroad as the "glue of the company" to
coordinate and integrate strategic activities, not merely to
complete particular tasks.

Dr. Prof. Shuming Zhao, School of Business, Nanjing University

Zhaosm@nju.edu.cn

30

Cross Culture HRM in China


In particular, multinational companies have increasingly set up

operations for manufacturing and services in China, bringing


with them HRM practices from all around the world. The
importation of new management practices has changed the
nature of the labor market and the practice of HRM, and will
potentially have an impact on Chinese society.

These external forces are paralleled by unprecedented

economic reform and the enactment of employment laws that


are changing the nature of organizational forms and
management practices within China. China's entry to the
World Trade Organization has further heightened the global
competition in the Chinese domestic markets.

Dr. Prof. Shuming Zhao, School of Business, Nanjing University

Zhaosm@nju.edu.cn

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Topics needed to be researched


What is the current state of HRM practices in China? what

theories may explain the variations in HRM systems?


How do multinational companies influence HRM
practices in China? What processes may lead to or what
may account for any similarities or differences in HRM
practices or systems between the MNCs and the Chinese
firms?
What have been the consequences of different HRM
practices or systems in China?

Dr. Prof. Shuming Zhao, School of Business, Nanjing University

Zhaosm@nju.edu.cn

32

Topics needed to be researched


(Continued)
What have been the intended and unintended

consequences (individual, group, company, or societal)


of different HRM practices?
What are the roles, competencies, and behaviors of HR
professionals in Chinese firms compared to MNCs and
what may account for potential similarities or
differences?
What are the developments in industrial relations in
China including the role of unions and labor laws on
HRM practices and labor-management relations?

Dr. Prof. Shuming Zhao, School of Business, Nanjing University

Zhaosm@nju.edu.cn

33

HRM Professionalization and HR


Competence
The word professional is often used to judge a persons work behavior

and to signify a superior performance.


Competence refers to an individuals knowledge, skills, abilities, or
personality characteristics that directly influence his or her job
performance.
Human resources have become increasingly integral to the success of
firms. At the same time, HR professionals have identified the key
competencies required for their field. No longer merely a "personnel"
function, HR is essential to a businesss success. To this end, HR
professionals at all levels should establish industry-wide certification
programs that embrace not only the classic administrative aspects of
the position but also the financial and general business knowledge that
helps ensure that HR will drive a firms success.
HR certification programs

Dr. Prof. Shuming Zhao, School of Business, Nanjing University

Zhaosm@nju.edu.cn

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HR Competencies
Most of the theoretical work and research on professionalization

originated from the sociological literature rather than the industrial


and organizational psychology or management literature. As a result,
much of the research on professionalization emphasizes the
processes underlying the formation of a profession rather than the
process through which professional skills are identified, developed,
and maintained.
There is arguably an even greater need for research examining how
HR competencies, once identified, can be most effectively
developed.
Which HR competencies can be acquired effectively through
formal HR training (i.e., HR graduate programs), and which
require experiential learning or significant on-the-job experience?

Dr. Prof. Shuming Zhao, School of Business, Nanjing University

Zhaosm@nju.edu.cn

35

2. Human Resource Management System


Model based on Strategy

PphilosophyandMission

CultureandValues
CultureandValues
BusinessStrategy
DemandonEmployees
byfirms

IndividualNeedsand
selfactulization

ValueEvaluationandDistribution
PerformanceAppraisalandCompensation

HRMManagementandDevelopmentSystem
HRMManagementandDevelopmentSystem
HRMTechniques

HRMSystem

HRMMechanism

Dr. Prof. Shuming Zhao, School of Business, Nanjing University

HRMProcess

Zhaosm@nju.edu.cn

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Strategic HRM Model


Strategic Competency
Renewal
Renewal

Learning and Innovation


Knowledge
Knowledge Knowledge
Knowledge
Change
Transformation
Knowledge
Change Knowledge Transformation Integration
Integration
Creation
Creation
Value
Value
Rare
Rare
Intellectual Capital
Difficult
Difficult
System
totocopy
copy
Store
Store

Human Resources

Human
Capital

Organized
Customer Social
Psychological Organized
Capital Capital Capital

Dr. Prof. Shuming Zhao, School of Business, Nanjing University

Core Competence
Competence
Core

HRMPractices,
Practices,such
suchas
asrecruitment,
recruitment,
HRM
training,performance
performancemanagement,
management,
training,
compensation,etc.
etc.
compensation,

Evolution
Evolution

Integration, restructuring, acquiring, and


using resources in order to adapt the
market change and operation ability of
creating market change.

Zhaosm@nju.edu.cn

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3. Evaluation on HRM Efficiency and


Effectiveness
(1) HR Index Survey, such as

Morale measurement,
(2) HR Reputation
(3) HR Accounting
(4) HR Auditing
(5) HR Case Studies
(6) HR Cost Control
(7) HR Benchmarking

Dr. Prof. Shuming Zhao, School of Business, Nanjing University

Zhaosm@nju.edu.cn

38

(8) HR Key Index, such as employee work

attitude, absenteeism, overtime, and


organization performance
(9) HRM Efficiency Index, such as GE uses
Employee Relations Index, some firms use
HR Performance Index.
(10) HR Management by Objectives
(11) HR Profit Center
(12) Analysis on Investment and Return
(13) HR Index: 15 factors
(14) Application of HR Evaluation Methods

Dr. Prof. Shuming Zhao, School of Business, Nanjing University

Zhaosm@nju.edu.cn

39

Todays Agenda
Ten Hot Topics and four Difficult Issues
HRM research Focus in China
Issues and Challenges for the Science of

HRM

Dr. Prof. Shuming Zhao, School of Business, Nanjing University

Zhaosm@nju.edu.cn

40

How to Combine Theory and Practice


Unlike other fields, HRM does not have a grand or

integrative theory. Furthermore, some have criticized HRM


as being an a theoretical, problem-driven field. The state of
HRM theory is the result of HRM's diverse theoretical roots,
coupled with the fact that earlier HRM academic pursuits
simply were designed to address (immediate) practitioner
problems.
Human resource management field is a multidisciplinary
field with roots in psychology, sociology, management,
education, economics, etc.
The field of HRM continues to evolve in practice as it does
as an area of research and scholarship.

Dr. Prof. Shuming Zhao, School of Business, Nanjing University

Zhaosm@nju.edu.cn

41

How to Combine Theory and Practice


There should be more collaboration between

nonacademic and academic field. HRM researchers


should recognize the importance of such
collaborations.
Business-university research partnerships
Such partnerships and collaborations can stimulate
theory development and testing (from anecdote and
observation to theory) on real-world problems and
issues.

Dr. Prof. Shuming Zhao, School of Business, Nanjing University

Zhaosm@nju.edu.cn

42

How to Use Multi-level Analysis


Historically, scholars have had more experience in the

field of HRM at developing theory at the individual


level of analysis.

A large number of studies have examined individual practice


independent of any other HR practices that might exist.

However, since 1980, with the influx of work in

business strategy and its integration with HRM, there


has been more of a macro focus in certain areas in the
field.

Some recent studies have focused on sets of HR practices.


These studies treat multiple HR practices as a system.

Dr. Prof. Shuming Zhao, School of Business, Nanjing University

Zhaosm@nju.edu.cn

43

The Individual Level Analysis


Traditionally, micro HRM research has explored the impact

of HR practices on individuals. Based on foundations, such


as industrial/organizational psychology and industrial
engineering, this kind of research largely explores how HR
can increase individual productivity, quality, or satisfaction.
It often entails manipulating relevant HR practices in an
experimental format, and then examining the impact on
individuals or assessing individuals on some characteristic
(skills, abilities, attitudes, etc.) and relating the assessments
to some performance measure (productivity, absenteeism,
turnover). In all cases, however, the goal of the research is to
identify and account for variance among individuals.

Dr. Prof. Shuming Zhao, School of Business, Nanjing University

Zhaosm@nju.edu.cn

44

The Organization Level Analysis


More recent macro HRM research examines the impact of HR

practices using the organization (corporation or business unit) as


the level of analysis. Most often this research assesses variables
through asking an informed respondent to provide the relevant
value for his/her organization. This kind of research tends to
focus on the variance in relevant variables across organizations,
assuming relative uniformity in the variable within the
organization.
This focus on the macro or organization level also has promoted
the importance and significance of HRM, because the typical
dependent or criterion variable used is organization performance.
In recent years, due to an increasing global and competitive
environment, organizations have been downsizing and
streamlining operations. As such, despite an increased strategic
view of HRM, organizations have been outsourcing HRM
functions such as training (Ford).

Dr. Prof. Shuming Zhao, School of Business, Nanjing University

Zhaosm@nju.edu.cn

45

The Organization Level Analysis


By taking a macro view of HRM, especifically a

strategic view of HRM, both HRM researchers and


professionals have the potential to underscore the
importance of HRM by highlighting its importance to
organizational performance.
The field of HRM is now in a position to deal more
effectively with research at different levelsindividual,
group, division, organization, and so forth.

A typology of HRM research

Dr. Prof. Shuming Zhao, School of Business, Nanjing University

Zhaosm@nju.edu.cn

46

A typology of HRM research


Number of HRM practices
Organization Strategic HRM
Industrial relations

Isolated functions

Level of analysis

High performance work

(i.e. research aimed at


demonstrating a relationship
between a particular functional
area and firm performance)

Psychological contract

Traditional / functional HRM

Employment relationship

Industrial / organizational

system

psychology

Individual
Source: Wright, P. M., Boswell, W. R., Desegregating HRM: A Review and Synthesis of Micro and Macro Human
Resource Management Research, Journal of Management, 2002, 28(3), 247276

Dr. Prof. Shuming Zhao, School of Business, Nanjing University

Zhaosm@nju.edu.cn

47

Researchers are beginning to learn and use more

complex statistical techniques such as repeated


measures regression and hierarchical linear
modeling. These techniques enable researchers
to simultaneously test out individual, group, and
organizational level effects. More multilevel
data sets become available and researchers have
a much better understanding in multilevel
statistical techniques.

Dr. Prof. Shuming Zhao, School of Business, Nanjing University

Zhaosm@nju.edu.cn

48

Thank you
Zhaosm@nju.edu.cn

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